Tighter norms for e-commerce players could help boost revenues of brick and mortar (B&M) retail stores by 150-200 basis points (bps) or Rs 10,000-12,000 crore in the 2020 fiscal, according to ratings agency CRISIL.

“Revenue growth of B&M retailers could increase 150-200 bps in fiscal 2020, as e-retailers re-engineer business models to conform to the revised – and more stringent – regulations, which would slow down their revenue growth,” CRISIL said in a statement.

In December, the government introduced new regulations that would bar online marketplaces with foreign investments from selling products of the companies where they hold stakes, and ban exclusive marketing arrangements.

These norms, which are effective February 1, would hit Amazon and Walmart-backed Flipkart the hardest. These two ecommerce platforms are also the largest in the country.

Sethi added that the impact on e-retailers would be largely in the electronics and apparel segments, which account for a bulk of their revenues.

CRISIL, in its statement, estimated that if B&M retailers lap up even a fourth of the impacted sales of e-retailers, it would lead to topline gains of Rs 10,000-12,000 crore.

“That, in turn, would mean revenue growth would be 150-200 bps higher at about 19 per cent, compared with CRISIL’s earlier expectation of 17 per cent for fiscal 2020,” it added.

CRISIL noted that following the restriction on equity ownership in sellers, e-retailers will need to make changes in their supply chain. They may alter business model in several ways, including adoption of franchisee model, thereby leading to increase in the cost of compliance as they strive to adhere to revised guidelines in less than 40 days.

Between fiscals 2014 and 2018, e-retail in India grew at 40 per cent a year to reach Rs 1 lakh crore, way faster than B&M’s growth at 13 per cent to Rs 3.2 lakh crore during the same period, it added.

“The strong growth in e-retail was driven by deeper market penetration and attractive pricing compared with B&M retailers. Robust FDI inflows of over Rs 95,000 crore in the past four fiscals have made this possible,” CRISIL Ratings Director Gautam Shahi said.